For many gamers, a trip to their local GameStop to purchase a
new game often begins with digging out old titles to sell back to
the retailer for store credit.

But a recent federal appeals court ruling could allow game
publishers to prohibit Grapevine-based GameStop Corp., which gets
the biggest portion of its profits from used games, from buying or
reselling used titles.

The 9th U.S. Circuit Court of Appeals decided last month in the
Vernor vs. Autodesk case that a software publisher can prohibit
buyers of its software from reselling the program to other
users.

Many computer programs are sold with licensing agreements that
the user must agree to in order to use the software, where terms
prohibiting resale are spelled out.

One of the terms in Autodesk Inc.'s AutoCAD program was that the
user was not allowed to resell it.

Previously, courts had ruled that software programs were covered
under the "first sale" doctrine, which allowed buyers to resell
products.

"The first sale doctrine has been a major bulwark in providing
public access by facilitating the existence of used book and record
stores, video rental stores, and, perhaps most significantly,
public libraries," R. Anthony Reese, a law school professor at
University of California, Irvine, wrote in a 2003 article.

But the surprising decision by the San Francisco-based
three-judge panel ruled that licensing agreements are binding and
supersede the first sale doctrine.

Legal analysts say the decision, if upheld by other courts,
perhaps even the Supreme Court, could shut down garage sales,
libraries, eBay Inc., Half Price Books and any other person or
company that sells second-hand materials.

Locally, the ruling's biggest impact could fall on GameStop.

Used games and consoles are critical to the company's success.
In the second quarter, for example, used game products accounted
for 31.4 percent of GameStop's sales, or $565.5 million.

But those products carry much higher profit margins than new
products, and they accounted for 46 percent of the company's gross
profit, or $260 million, in the quarter.

GameStop declined to make an executive available for an
interview about the Autodesk ruling.

"As an entertainment company, we are interested in the outcome
of this decision, and we are monitoring the situation closely," the
company said in a prepared statement.

Many game publishers complain that GameStop's dominance in the
used game market hurts their bottom line, since they don't get a
cut of those resales.

GameStop has argued that used games actually increase new-game
sales - 14 percent of new titles are bought with credit customers
receive from trading in old games.

But many publishers aren't sold on that argument.

Cory Ledesma, creative director for wrestling games at THQ, made
the point bluntly in a recent interview with
computerandvideogames.com.

"We hope people understand that when the game's bought used, we
get cheated," he said.

Game publishers haven't said yet how they might use the court
decision.

Rulings by the 9th Circuit court are notorious for being
overturned, said Mark Methenitis, a Dallas lawyer who specializes
in electronic entertainment and gaming law.

But if the Autodesk decision is upheld, industry observers
wonder whether sentiments such as those expressed by Ledesma could
lead to new licensing agreements that prohibit second-hand
sales.

Methenitis said he would be surprised if the appeals court's
ruling holds up. But he also didn't expect the appeals court to
rule as it did.

"It was surprising for them to come out flatly against the
consumer position," Methenitis said. "I'd never heard of anyone out
there trying to police resales like this."

Before the court handed down its ruling, eBay filed a brief on
behalf of Timothy Vernor, who had tried to sell copies of
Autodesk's AutoCAD design and drafting software on the online
auction site. Autodesk complained to eBay that the listings
violated its copyright and had them pulled, which Vernor
protested.

EBay's brief argued that Autodesk's complaint of copyright
infringement was not supported by the U.S. Copyright Act. It also
suggested that sales of used items are a critical part of the
economy.

"Two of the primary effects and public benefits of the first
sale doctrine are increased access to, and affordability of,
copyrighted works," eBay said in its brief. "Secondary markets
encourage economic efficiency by creating opportunities for buyers
and sellers to exchange copies of copyrighted works at mutually
satisfactory price points."

Even if the ruling does stand, technological change could render
it meaningless.

A growing number of game makers are selling their products as
digital downloads, which are physically impossible to sell or trade
to another user. That trend also is challenging GameStop's
business.

But Methenitis said even if the 9th Circuit's decision is
upheld, it probably wouldn't make sense for publishers to flatly
prohibit used-game sales.

More likely, GameStop, as well as other retailers such as Best
Buy Co. and Target Corp. that have begun dabbling in used games,
would negotiate agreements with the publishers.

"I'm not expecting to wake up tomorrow and see no used-game
sales," Methenitis said. "From a business standpoint, it wouldn't
do them a lot of good."